Bitcoins held on exchanges have been transferred outside the United States

More than 50% of Bitcoins held on exchanges have been transferred outside the United States, indicating a decline in the country's share of the global cryptocurrency market. This shift can be attributed to the chaotic and repressive nature of industry regulations, which has prompted companies and assets to move offshore. The situation has been further exacerbated by the Securities and Exchange Commission's (SEC) lawsuits against major exchanges. Presently, a significant portion of the bitcoins that platforms hold for their customers has been relocated to offshore and international platforms.

A recent research report by CryptoQuant reveals that the reserves of Bitcoin on cryptocurrency exchanges in the United States have plummeted to levels last seen in 2017. The substantial decrease in Bitcoin reserves can be attributed to the lack of a clear regulatory framework for the crypto market in the US.

The enforcement approach taken by regulators is outdated, leading crypto firms to seek refuge offshore. Hong Kong, in particular, has emerged as an attractive destination due to its favorable conditions for exchange operations. Additionally, crypto organizations are also relocating to the European Union (EU), where comprehensive legislative norms have been developed. As a result, both major platforms and small startups involved in the digital economy are gravitating towards these regions.

In response to the regulatory uncertainties, some exchanges in the US have decided to exit the market altogether, while others have ceased supporting certain assets to avoid accusations of violating regulatory requirements.

The declining market share of the US in the crypto market is indicative of a broader trend of de-dollarization. This trend is intensifying as the US continues to lose ground in emerging and existing sectors. In addition to the decrease in Bitcoin reserves, the reserves of Ethereum are also dwindling, with approximately 56% of ETH held on crypto exchanges now located outside the US.

The trading volume on international crypto exchanges currently surpasses that of US exchanges by fourfold. The dominance of Bitcoin in spot trading volume in the US has dipped below its 2017 level, currently standing at 21%.

US exchanges face limitations in accessing perpetual futures markets, which are significantly larger than spot trading and are prohibited from offering such services. Conversely, spot and futures trading in Asia has experienced a 30% and 20% increase, respectively.

According to a study conducted by CryptoQuant, the market capitalization of US stablecoins has suffered a 35% decline, resulting in a loss of $15 billion in 2023. Despite this, the US still holds a dominant position in bitcoin mining globally. However, there is a possibility that the country may relinquish this position to the Russian Federation or another state in the future.